ASEAN KEY DESTINATIONS
Astra Sedaya considers issuing bonds worth Rp 10 trillion
Automotive financing firm PT Astra Sedaya Finance (ASF) is mulling over issuing a series of bonds worth around Rp 10 trillion (US$724.12 million) to fund its motor vehicle financing next year.
The financing target of ASF in 2016 will be lower than this year’s Rp 21 trillion as it is seeing demand for new financing decline so far this year. Previously, the company aimed to disburse Rp 24 trillion in financing by December.
ASF chief finance officer Samuel Manasseh said on Friday the slow demand would adversely affect the proposed bonds value.
“The first part of the bonds issuance will be worth less than Rp 2 trillion,” he said on the sidelines of Astra International’s workshop in Sentul, Bogor, West Java.
He added the company’s cash was still able to fund financing during next year’s first three months. However, it would wait and observe the economic development before deciding if a bonds issuance was a realistic move to raise funds for the second quarter.
Thus, he said, the issuance would probably happen in the second half.
ASF, a part of the diversified conglomerate, Astra International Indonesia (ASII), saw its new financing value drop 19 percent year-on-year (yoy) to Rp 15.8 trillion as of September. Its net profits fell by 16.63 percent yoy to Rp 722 billion.
“Uncertainties in the global and national economic situations has made people postpone upgrading their vehicles,” he said.
A report by Fitch Ratings made available on Wednesday read that the transition from two- to four-wheel vehicles would take place at a slower pace given the current macro economic challenges.
It also forecasts car and motorcycle sales volumes will only post a modest growth of about 3 percent after declining by 18 percent and 20 percent yoy, respectively, as of September.
Meanwhile, the Federal International Finance (FIF) Group, another financing unit of ASII, will also consider issuing bonds next year to fund its new financing target of between Rp 28 trillion and Rp 29 trillion.
“Likely, we will issue [the bonds], but we will assess the market situation first,” said FIF treasury and funding head Herry Fandy on Friday.
The firm has issued bonds worth around Rp 4.5 trillion this year from a planned total bond issuance, until April 2017, worth Rp 10 trillion.
Herry, however, refused to detail the proposed schedule of the next issuance.
He expressed optimism that demands for motorcycle financing would pick up in next year’s second or third quarter after staying slow in the first three months.
Despite lower demand for motorcycles this year, FIF recorded a 7.6-percent growth yoy as of September to Rp 21.1 trillion. Its assets value also expanded 11 percent to Rp 32.9 trillion.
Both firms voiced a similar view that taking foreign loans was not an option while the value of the rupiah compared to the US dollar was still volatile.
In addition, Samuel said that foreign loans carried high costs that would weigh down his firm’s balance sheet.
Meanwhile, Herry predicted that the amount of foreign loans would be smaller in the current situation, adding that FIF would prioritize local sources of funds as long as the greenback kept its strength. The Jakarta Post
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